During his long and provocative legal career, former class action securities litigator and convicted felon Bill Lerach was a self-selected lightening rod for controversy. He taunted his foes, stalked his enemies, challenged convention, and in the process transformed himself into a larger than life figure.
And so when his legal career collapsed among revelations that he and his colleagues had paid improper kickbacks, the post-mortems almost inevitably reflected much of the same mythmaking hyperbole that Lerach himself generated. Lerach became a stock figure in a morality tale, in which the angry, defiant mortal is struck down for his pride.
The reality is that Lerach’s tale is so much more interesting that this stock narrative frame. And is certainly a tale worth telling, as demonstrated in the marvelous new book entitled "Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to Its Knees," written by two Pulitzer-prize winning journalists, Patrick Dillon and Carl Cannon. (Full disclosure: Carl is an old family friend, but I feel comfortable in saying I would have liked the book every bit as much if Carl and I had never met.)
The authors explain in their Prologue that initially, Dillon had intended to co-author a book with Lerach, but that project got waylaid when it became clear that Lerach’s legal difficulties were serious. Though the project moved into an unanticipated direction as a result of these events, Lerach continued to cooperate with the authors, right up to making himself available for interviews from prison.
The authors ask themselves why Lerach cooperated with them, and they confess they are not entirely sure. I was initially concerned the book might shade in Lerach’s favor or even fall into myth-making trap. Make no mistake, however, the authors fully and damningly document all of Lerach’s most outrageous flaws and faults.
The authors open their book at the point where Lerach’s many shortcomings have finally caught up to him, at the court hearing in October 2007 when Lerach pled guilty to one count of obstruction of justice. Then, to discern how the career of one of the most influential lawyers of our time could have come to this, the authors then trace his career from its very beginning, including his childhood in Pittsburgh and his early legal career with the Reed Smith firm. A case in which Lerach was involved for Mellon Bank took both took Lerach to San Diego and also introduced him to Mel Weiss, his law partner whose fame, fortune and fate would follow its own parallel trajectory.
Lerach’s skill and his excesses emerged in his first successful case in San Diego, in which he represented a group of retirees against the Methodist Church. Lerach’s legal performance was by all accounts brilliant, and produced a great result for his clients. But, the authors note, "along with the good came the other things: the hubris, the taunting, the acrimony with the opposing side, the hyperpartisanship borne of the Manichean world view."
Following after this victory, Lerach sooned carved out a career for himself as the high-profile scourge of Corporate America, and at the same time becoming the poster child for class action excesses. This list of companies Lerach ultimately sued reads like a membership list for the U.S. economy. Lerach became feared and reviled. And he also became enormously rich.
Despite (or perhaps because of) his enormous success, the weaknesses Lerach had shown in the Methodist Church case clearly could at times consume him. This is perhaps nowhere as evident as in his mad, ill-fated bid to avenge himself on Daniel Fischel, who had testified as a witness for the defense in the Nucor case. Lerach blamed Fischel for his stinging defeat in that case. When Lerach later filed a suit against Charles Keating in connection with the Lincoln Federal scandal, Lerach named Fischel and his firm as defendants. Though the claim was later compromised (in a "disposition," not a "settlement") Fischel never forgot the many outrageous things Lerach said along the way (many of which cannot be reproduced in this family-oriented blog).
In the end, Fischel was the one to get revenge. His subsequent slander suit against Lerach and his firm resulted in a $45 million verdict in his favor, and while the unresolved punitive damages phase was pending, the law firm agreed to pay $50 million to resolve the whole thing, agreeing even to have the settlement funded, in cash, that same day. There is something about this whole sequence of events that encapsulates so much about Lerach — the excess, the outrageousness, and the way in which his own conduct caused him so much damage.
The book’s authors are not lawyers, but I think they deserve high marks for the way they deal with the legal topics. They also deserve credit for their appreciation of the atmosphere that Lerach’s excesses generated and how it influenced other participants in the process.
For example, the authors perceptively note that many of Lerach’s targets felt compelled to capitulate rather than confront a mad man – yet, the authors note, many of the companies who were unwilling to give in managed to walk away paying nothing. The lesson that the authors drew was that "if you really had done nothing wrong, it made sense to fight these class action securities cases in court. If more firms had done this successfully, there likely would have been fewer plaintiffs’ lawsuits."
The authors, unlike many other journalists that traverse this ground, also demonstrate an appreciation for the complex role that D&O insurance plays in the process, and indeed, that the actions and activities of class action attorneys have on the D&O insurance marketplace.
But what the authors do best, and what makes this book worth reading, is the way they weave the story of the criminal investigation through the massive corporate scandals, which were unfolding at the same time. The authors also methodically show how so much of Lerach’s crusading activities depending on his firm’s corrupt system for procuring plaintiffs on whose behalf to bring the suit, as well as on the testimony of a corrupt expert witness.
Many of the details of the criminal investigation may be familiar to many readers. The almost unbelievable way that a lover’s quarrel in Cleveland triggered a sequence of events that ultimate brought down Bill Lerach and Mel Weiss has been told elsewhere. The authors retell these tales particularly well. But what makes their version so compelling is the way the authors overlay events that were going on at the same time, particularly Lerach’s representation of the Enron litigants and his dispute with Weiss over the WorldCom case.
Frankly, Lerach’s contributions also help make the story compelling. His involvement provides a narrative tone and personal focus that bring the events to life. Lerach does not come off sympathetically, but he does come off as a real person – corrupt, deeply flawed, but real. As the authors say toward the end of their book, "Bill Lerach was no monster, but he had indeed gone after fraud by using fraud."